Wisconsin marketer J.P. Remington appreciates the important role inside profit centers such as foodservice counters and fountain islands play in driving success at his nine central and northern Wisconsin c-stores.
This third-generation marketer, though, has a confession to make: The cash and profit cow that’s emblematic of inside sales might face some intramural competition of its own in the near future.
To many marketers, fuel is that lower-margin destination purchase that gets people inside the store, where those high-profit items sustain the business. When Remington and his father, Jerry, move forward on an ambitious rebranding initiative this fall, he believes fuel is going to do more of the driving.
Scouting for about a year for new, profitable and “retailer-friendly” branding opportunities, Remington and his father stumbled upon VP Racing Fuels and its c-store prototype earlier this year. Liking the terms and conditions, they began a station conversion to the fledging brand—one that stresses, for starters, optimal fuel quality that many racing enthusiasts know well.
VP Racing Fuels—with a reputation that precedes it with hard-core racing participants—recently announced it was diving headlong into the branded retail business, in essence striving to create a “super-retail brand.” Backed by what it calls a “lean and mean” team of a half-dozen top execs plus regional sales managers, the initiative is propelled by two branded images: VP Racing Fuels canopies, dispensers and backlit signage outside the store; and c-store Winner’s Circle, a name that ties closely to VP’s racing motif.
Remington says the flexibility of the VP contract trumps what exists with his four current major brands. VP enables Remington to integrate the new VP station and Winner’s Circle store image—both of which he calls sharp and aesthetically appealing—but retain maximum control of what’s merchandised inside and outside the store. At the fueling islands or in a metal “Fuel Cube,” VP gives retailers the option to carry its array of street legal and off-road racing fuels, and inside the store VP’s portfolio of fuel additives and accessories. Retailers who rebrand with VP often view the conversion as a seamless transition to their existing business, both outside and inside the store, from the standpoint of the store plan-o-gram.
With the conversion slated to start last month at three of its family-owned company’s stores, the first of which is located in Antigo, Wis., Remington says he’s seriously considering switching more corporate stores to VP when contracts with the company’s existing fuel brands are up.
“We started buying racing fuel from VP three or four years ago, and that led to learning more this year about their new branded program,” he says. The jobber has since inked a 10-year contract wherein San Antonio-based VP fetches a half-cent-per-gallon royalty fee from Remington. VP also provides financial loan assistance for any branding or imaging costs Remington or other retail partners might require.
“This is really old school. It was a relationship forged on a handshake—that’s how my dad likes it. We hate those 10-page brand contracts,” says Remington.
The brand image is sleek and sharp. Remington likens it to Shell from an aesthetic and “curb appeal” standpoint. While Remington flies the VP flags, the company is able to acquire fuel from its own existing wholesale sources because VP is not a refiner.
“We sell their racing fuels, which is a no-brainer,” says Remington. “I believe they are offering a major brand—it’s just that a lot of people don’t realize it.”
Passion for Power
Remington raves about the wide variety of fuel products and accessories VP touts. He envisions gasoline as more of a destination purchase driven by attributes of high-performance octane quality combined with an opportunity to sell premium additives.
VP has staked its reputation on high-performance fueling. Two new specialty fuels for racing—VP101 and VP102, carrying octane ratings of 101 and 102, respectively—have the highest octane ratings of any street-legal fuel on the market.
It’s all part of what the company calls “madditives” and octane-boost power, which is a nod to company founder Steve Burns, who became known as the “Mad Scientist” based on his “maniacal” passion for making power and winning, according to company marketing materials.
Remington has other retail outlets, including a snowmobile dealership, in which to sell fuels in the portfolio, adding to his economic leverage. “The two big names in racing fuel are Sunoco and VP,” says Remington. “We like the fact that the people who run snowmobiles, personal watercraft and ATVs can visit our stations and use fuel cages [welded cages in which 5-gallon pails of specialized fuels and additives are sold] rather than take vehicles to a dealership.
“It’s like when you promote a car wash at the fuel island; instead, we promote octane boosters or fuel-injector cleaners while they fill up,” he continues. He plans to sell the various additives at the snowmobile dealership as well.
But what Remington calls “game changing” are the terms and conditions of VP’s proprietary credit-card arrangement. According to Alan Cerwick, president of VP Racing Fuels Inc., “We have the lowest credit-card rate terms in the industry, thanks to an alliance with First Data. Credit-card costs are the No. 2 cost for a retail operation. So if you can remove that as a point of confrontation, you are no longer an enemy of the retailer. What you see is what you get. It’s very transparent.”
With the credit-card terms, the company may save $35,000 a year in fees, Remington says.
All Aboard
With a goal mainly to convert but also build 3,000 branded U.S. sites over the next few years, VP Racing Fuels appears to be creating a stir within the c-store realm.
Traditional refiner brands such as Sunoco have been slowly yielding to super-retail brands such as QuikTrip, Sheetz and Wawa. VP is eager to join those ranks. “I consider us the Burger King of the fuel business,” says Cerwick. “We make it like you want it.”
“Sheetz and Wawa have deli and foodservice as a draw. We ask, ‘How do you want your car to really run?’ The fuel is our thing. Retailers need to be competitive, and they need unbranded fuel to compete with the super-retailers,” says Matt Schuster, regional manager of branded wholesale business development for VP Racing Fuels. “There’s a hole for us to fill, and that’s appealing to folks who are performance enthusiasts, who are seeking better gas mileage and optimal horsepower.”
Like Remington, other retailers are catching the VP wave. Petromark Inc., Harrison, Ark., which owns and operates 40 locations and has dealer accounts with another 160, is in the process of rebranding three units in northwest Arkansas to VP, and 12 more will be up and running by the end of the year, according to Steve Turner, co-owner of Petromark.
“This was not an overnight decision by our company,” Turner says. “At the NACS [Show] last year, we saw a synergy and an energy with VP and said, ‘Why try and reinvent the wheel when they already did it?’ The image, the credit card and the fact we can buy fuel wherever we desire are all keys. They did the upfront legwork, plus our dealers can get financing to enhance their fortunes as well.”
There’s a lot to like about the branding initiative, Remington says—so much so that his company is thinking about becoming 100% VP branded in time.
Remington’s company was started in 1968 by his grandfather, and then his dad jumped on board. In 10 years, Remington has doubled its annual gallons to 40 million to 45 million per year. The jobber has supply agreements with 30 to 40 dealers and Indian casinos in the area. Remington dealers will be supplied VP fueling products, but most are unbranded and won’t become VP-branded retailers. Remington says the conversion cost per location is about $30,000 to $35,000.
“Surprisingly, this is a known brand to racers in our world, so brand recognition is not going to be a hard sell to the public,” says Turner of Petromark, who says the company is absorbing costs of about $27,000 per store for the conversion.
Turner says the company will “stay diversified” with its retail brand outlay: “We are about 50% on the unbranded side, which accounts for 32% of our volume. We’re hoping the VP image will allow us to have higher volume at these sites, which have the potential to step up their throughput.”
Cerwick, who joined VP two years ago, coming from Valero, says VP’s goal is to “put the entrepreneur on a level playing field, and be a lifeline for them to achieve rapid growth.”
“I see Sheetz and Wawa as competitors, not Valero or ExxonMobil,” Cerwick says. “We provide the retailer the tools to compete vs. the super-retailer. As an entrepreneur at heart, I want to see entrepreneurs survive.”
‘Green Flag’ Time for VP Racing Fuels
Alan Cerwick, president of San Antonio-based VP Racing Fuels Inc., wasn’t sure if the VP retail initiative would come to fruition—at least on his watch, at least with his hands-on involvement.
The initiative is VP Racing Fuels’ decision to jump into the branded retail business to create what company execs call a “super-retail brand.” The initiative features two core branded centerpieces: VP Racing Fuels canopies, dispensers and backlit signage outside the store, and Winner’s Circle c-store—a name aligning closely to the racing motif that’s long been the company’s calling card.
On the fuel side, VP offers high-margin, niche fuels as a way to attract new retail customers to the mainstream fuel business, pulsed by its VP101 unleaded (street legal) and premium race fuels for off-road or on the track.
Cerwick, a longtime veteran of Valero and Koch Industries, wasn’t certain he would be a part of the ambitious vision, but after ironing out some wrinkles, he says all systems are go.
“[VP founder] Steve Burns and I had come to an impasse at that time on some matters, and I did not think the deal would get done,” he says. “I asked that if I could not do this with VP, could I do it elsewhere?’ The answer was no. I could not find any brand as uniquely positioned as VP was.
“The VP business has been built on the strength of 40 years of experience, and it would have been hard to create a new racing fuel brand that has this kind of stamina.”
That stamina might soon be on steroids. The brand has 35 to 40 sites nationwide that will be rebranded by the end of last month, and another 175 sites in the pipeline as potential branded partners. Of those, Cerwick hopes to get “60% to 80% commitments.”
VP has strict standards regarding retailer performance. “You have to have a reputation that is in alignment with our image standards, because we turn away people seeking to brand with us,” he says.
As for the corporate expansion, the first stage is getting “those first 1,000 stores up and running and putting products on the shelves,” he says. “We might end up with 2,000 to 3,000 c-stores and a couple hundred quick lubes when it’s all said and done. We also have product distribution NAPA Auto Parts, Cabela’s and others.”
From a geographic standpoint, Cerwick says, the company is mobilizing in the state of Washington, Wisconsin, Texas, Oklahoma, Kansas, Nebraska, Ohio, Michigan, Illinois and Pennsylvania—all with the intention of building a “consumer” brand.
“This is an opportunity for entrepreneurs to invest in themselves, and take control of their future,” he says.
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